<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _________________
Commission File Number: 018581
RENAISSANCE CAPITAL PARTNERS, LTD.
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
Texas 75-2296301
__________________________________________________________________________
(State or other jurisdiction (I.R.S. Employer I.D. No.)
of incorporation or organization)
8080 North Central Expressway, Dallas, Texas 75206-1857
__________________________________________________________________________
(Address of principal executive offices) (Zip Code)
214/891-8294
__________________________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Assets, Liabilities and
Partners' Equity
(Unaudited)
Assets December 31, June 30,
1996 1997
Cash and cash equivalents $ 56,723 $ 1,391,236
Investments at market value, cost of
$8,960,241 and $9,095,105 12,981,367 9,875,131
Interest and fees receivable 37,125 124,498
Other assets 1,065 1,065
----------- -----------
$13,076,280 $11,391,930
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable - trade $ 51,627 $ 52,834
Accounts payable - related party 834,071 69,033
----------- -----------
Total liabilities 885,698 121,867
----------- -----------
Partners' equity:
General partner 48,638 39,433
Limited partners (128.86 units) 12,141,944 11,230,630
----------- -----------
Total partners' equity 12,190,582 11,270,063
----------- -----------
$13,076,280 $11,391,930
=========== ===========
See accompanying notes to financial statements.
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RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1997 1996 1997
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Income:
Interest $ 3,048 $ 49,002 $ 6,726 $ 89,481
Dividends - 1,430 - 2,314
Other investment income - 15,129 - 16,467
---------- ---------- ---------- ----------
Total income 3,048 65,561 6,726 108,262
---------- ---------- ---------- ----------
Expenses:
General and administrative 68,040 204,010 124,304 299,958
Management fees 41,344 56,637 84,065 112,738
---------- --------- ---------- ----------
Total expenses 109,384 260,647 208,369 412,696
---------- --------- ---------- ----------
Investment income (loss) net (106,336) (195,086) (201,643) (304,434)
Loss from investment in
Sunrise Media LLC - (86,040) - (143,084)
Net realized and unrealized
gain (loss) on investments (167,629) 111,192 (1,496,724) (473,001)
Net decrease in net assets
resulting from operations ($ 273,965) ($ 169,934) ($1,698,367) ($ 920,519)
========== ========== ========== ==========
Income (loss) per limited
partnership unit ($ 2,105) ($ 1,306) ($ 13,048) ($ 7,072)
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Partners' Equity
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
------- -------- -----
<S> <C> <C> <C>
Balance, December 31, 1996 $ 48,638 $12,141,944 $12,190,582
Net income (loss) (9,025) (911,314) (920,519)
--------- ----------- -----------
Balance, June 30, 1997 $ 39,433 $11,230,630 $11,270,063
========= =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<PAGE> 5
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended June 30, Six Months Ended June 30,
1996 1997 1996 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net increase (decrease) in net assets
resulting from operations ($ 273,965) ($ 169,934) ($1,698,370) ($ 920,519)
Adjustments to reconcile net decrease to
cash flows from operating activities:
Loss from Sunrise Media, LLC - 86,040 - 143,084
Unrealized (gain) loss on investments 342,934 (111,194) 1,807,414 3,241,099
Realized (gain) loss on investments (175,305) - (310,687) (2,768,100)
(Increase) decrease in accounts receivable (7,114) (47,052) (12,099) (87,373)
Increase (decrease) in accounts payable 74,093 14,211 103,428 (763,831)
---------- ---------- --------- ---------
Total adjustments 234,608 (57,995) 1,588,056 (235,121)
---------- ---------- --------- ----------
Net cash flows from operating activities (39,357) (227,929) (110,314) (1,155,640)
---------- ---------- --------- ----------
Cash flows from investing activities:
Purchase of investments (80,000) (200,000) (122,500) (636,697)
Proceeds from sale of securities 221,705 - 395,265 3,126,850
---------- ---------- --------- ----------
Net cash flows from investing activities 141,705 (200,000) 272,765 2,490,153
---------- ---------- --------- ----------
Cash flows from financing activities:
Distributions to limited partners - - - -
---------- ---------- --------- ----------
Net increase (decrease) in cash 102,348 (427,929) 162,451 1,334,513
Cash and cash equivalents at beginning of period 62,926 1,819,165 2,823 56,723
---------- ---------- --------- ----------
Cash and cash equivalents at end of period $ 165,274 $1,391,236 $ 165,274 $1,391,236
========== ========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements
June 30, 1997
1. ORGANIZATION AND BUSINESS PURPOSE
---------------------------------
Renaissance Capital Partners, Ltd. (the "Partnership"), a Texas
limited partnership, was formed on July 31, 1989. Limited Partnership
contributions of $12,886,000 were secured upon final closing of the
Partnership on June 14, 1990. The Partnership seeks to achieve current
income and long-term capital appreciation by making investments primarily
in private placement convertible debt securities of smaller public
companies. The Partnership has elected to be treated as a business
development company under the Investment Company Act of 1940, as amended.
The Partnership will terminate upon liquidation of all its investments, but
no later than June 14, 1998 subject to the right of the Independent General
Partners to extend the term for up to three additional one-year periods if
they determine that such extension is in the best interest of the
Partnership.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
A. ORGANIZATIONAL COSTS - Costs of organizing the Partnership were
capitalized and amortized on a straight-line basis over five years. These
costs were completely amortized during the quarter ended June 30, 1995.
B. CONTRIBUTED CAPITAL - Proceeds from the sale of the limited
partnership interests, net of related selling commissions and syndication
costs, are recorded as contributed capital.
C. STATEMENT OF CASH FLOWS - The Partnership considers all highly
liquid debt instruments with original maturities of three months or less to
be cash equivalents. No interest or income taxes were paid during the
periods.
D. VALUATION OF INVESTMENTS - The valuation of investments in
debentures which are convertible into unregistered securities is based upon
the bid price of the underlying securities obtained through normal market
systems less a discount for selling and registration costs. For those
investments not having an established market, the valuation is at the
Partnership's costs for the first six months after closing and will be
redetermined by the General Partners subsequent to that time period.
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RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
June 30, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------
E. MANAGEMENT ESTIMATES - The financial statements have been prepared
in conformity with generally accepted accounting principles. The
preparation of the accompanying financial statements requires estimates and
assumptions made by management of the Partnership that affect the reported
amounts of assets and liabilities as of the date of the statements of
assets, liabilities and partners' equity and income and expenses for the
period. Actual results could differ significantly from those estimates.
F. INTEREST INCOME - Interest income is accrued on all debt
securities owned by the partnership on a quarterly basis. When it is
determined that the interest accrued will not be collected, the income for
that quarter is reduced to reflect the net interest earned during the
period. Interest accrued for the current quarter was $93,879, and the
amount determined to be uncollectible and charged against the income was
$44,877.
3. MANAGEMENT
----------
Renaissance Capital Group, Inc. (Renaissance), the Managing General
Partner, serves as the investment adviser for the Partnership. Renaissance
is registered as an investment advisor under the Investment Advisors Act of
1940. Pursuant to the management agreement, Renaissance will perform
certain services, including certain management, investment, and
administrative services, necessary for the operation of the Partnership.
Renaissance is entitled to quarterly fees equal to 0.5% of the
Partnership assets at the end of each quarter. On April 21, 1994, at the
Annual Meeting of Limited Partners, a proposal to amend the Advisory
Agreement was ratified by the Limited Partners. The agreement now dictates
that to the extent any portion of such fee is based on an increase in Net
Assets Value attributable to non-realized appreciation of securities or
other assets that exceed capital contributions, such portion of the fee
shall be deferred and not earned or payable until such time as appreciation
or any portion thereof is in fact realized and then such deferred fees
shall be earned and paid in proportion to the gains in fact realized. Fees
due to Renaissance for the three months ended June 30, 1997 were $56,637.
<PAGE>
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RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements
June 30, 1997
3. MANAGEMENT (continued)
----------
Renaissance is reimbursed by the Partnership for administrative
expenses paid by Renaissance on behalf of the Partnership. For the three
months ended June 30, 1997, the Partnership incurred reimbursable expenses
of $12,398 and reimbursed Renaissance $11,675 to be applied to the total
account.
In addition, the Partnership is served by two independent, individual
general partners (the "Independent General Partners"). The Independent
General Partners receive a quarterly fee of $6,000 each, payable in
advance.
4. FEDERAL INCOME TAXES
--------------------
No provision has been made for Federal income taxes as the liability
for such taxes is that of the partners rather than the Partnership.
5. PARTNERSHIP AGREEMENT
---------------------
Pursuant to the terms of the partnership agreement, all items of
income, gain, loss and deduction of the Partnership, other than any Capital
Transaction, as defined, will be allocated 1% to Renaissance and 99% to the
Limited Partners. All items of gain of the Partnership resulting from a
Capital Transaction shall be allocated such that the Limited Partners
eceive a cumulative simple annual return of 10% on their capital
contributions and any remaining gains shall be allocated 20% to Renaissance
and 80% to the Limited Partners. All items of loss resulting from Capital
Transactions shall be allocated 1% to Renaissance and 99% to the Limited
Partners.
6. INVESTMENTS
-----------
Investments of the Partnership are carried in the statements of
assets, liabilities and partners' equity at quoted market or fair value, as
determined in good faith by the Managing General Partner and approved by
the Independent General Partners.
<PAGE>
<PAGE> 9
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements
June 30, 1997
6. INVESTMENTS (continued)
-----------
For securities that are publicly traded and for which quotations are
available, the Partnership will value the investments based on the closing
sale as of the last day of the fiscal quarter, or in the event of an
interim valuation, as of the date of the valuation. If no sale is reported
on such date, the securities will be valued at the average of the closing
bid and asked prices.
Generally, debt securities will be valued at their face value.
However, if the debt is impaired, an appropriate valuation reserve will be
established or the investment discounted to estimated realizable value.
Conversely, if the underlying stock has appreciated in value and the
conversion feature justifies a premium value, such premium will of
necessity be recognized.
The Managing General Partner, subject to the approval and supervision
of the Independent General Partners, will be responsible for determining
fair value.
<PAGE>
<PAGE> 10
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
June 30, 1997
<TABLE>
<CAPTION>
CONVERSION FAIR
COST OR FACE VALUE VALUE
<S> <C> <C> <C>
BIOPHARMACEUTICS, INC.
12.5% Convertible Debenture $ 700,000 $1,575,000 $1,430,500
conversion price $.25, maturity 10/10/98
12.5% Convertible Debenture 402,941 839,460 789,092
conversion price $.27, maturity 10/1/98
Common Stock 241,250 542,813 510,245
GLOBAL ENVIRONMENTAL CORP.
Common Stock 2,360,948 2,656,067 2,496,703
10% Term Note 150,000 168,750 158,625
INTERNATIONAL MOVIE GROUP, INC.
12% Convertible Subordinated Debenture 1,500,000 1,500,000 750,000
UNICO, INC.
Preferred Series C Stock 1,589,220 1,589,220 1,589,220
9.25% Term Note 50,000 50,000 50,000
10% Term Note 224,000 224,000 224,000
----------- ----------- ----------
Subtotal 7,218,359 9,145,310 7,998,385
OTHER INVESTMENTS
SUNRISE MEDIA, LLC 1,876,746 1,876,746 1,876,746
formerly CEL ----------- ----------- ----------
$ 9,095,105 $11,022,056 $9,875,131
=========== =========== ==========
</TABLE>
The Partnership advanced $200,000 to Sunrise Media, LLC under terms of
a 7% note and security agreement during the quarter.
7. RELATED PARTY TRANSACTIONS
--------------------------
Certain officers of Renaissance are also limited partners in the
Partnership. There were no distributions for the three months ended June
30, 1997.
<PAGE>
<PAGE> 11
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
June 30, 1997
8. LITIGATION
----------
The Partnership is involved in litigation arising in the ordinary
course of business. In the opinion of the Partnership's legal counsel and
management, any liability resulting from such ligitation . . .
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- RESULTS OF OPERATIONS
(1) MATERIAL CHANGES IN FINANCIAL CONDITION
Discuss material changes from end of preceding fiscal year to date of
most recent interim balance sheet provided. If necessary for an
understanding, discuss seasonal fluctuations.
For the past three months, the Partnership's net assets resulting from
operations decreased approximately $169,934, and the total partners' equity
account decreased by a like amount. Investments at fair value increased in
the second quarter, reflecting a higher overall valuation for those
investments remaining in the portfolio.
The following portfolio transactions are noted for the quarter ended
June 30, 1997 (portfolio companies are herein referred to as the
"Company"):
BIOPHARMACEUTICS, INC. On June 24, 1997, the Company effected a one
share for four shares reverse split of its common stock. Accordingly, the
conversion price of the $700,000 of Convertible Debentures issued in 1992
was reset to $1.00 per share, and the conversion price of the $402,941 of
Convertible Debentures issued in 1996 was reset to $1.08 per share.
GLOBAL ENVIRONMENTAL CORP. On July 31, 1997, in accordance with the
provisions of the loan agreement, the Partnership converted the entire
principal of its $150,000 10% Promissory Note into 600,000 shares of the
Company's common stock. This conversion was required when the Company
obtained a loan secured by a lien on the land and improvements owned by its
Danzer Industries, Inc. subsidiary, located in Hagerstown, Maryland.
SUNRISE MEDIA, LLC. On April 1, 1994, the Partnership entered into an
agreement with Alvin H. Perlmutter, Inc. ("AHP") and Richardson &
Associates ("R & A") to restructure and activate Sunrise Media, LLC
("Sunrise"). This agreement provides for AHP to contribute to Sunrise its
entire interest in all of the original programming in production or in
development, together with AHP's entire share of revenues derived from
properties in distribution, along with film production equipment, for a 37%
interest in Sunrise.
<PAGE>
<PAGE> 12
(1) MATERIAL CHANGES IN FINANCIAL CONDITION (continued)
R & A is to render ongoing consulting services and is to coordinate a
private equity financing effort to raise additional working capital. R & A
received a 7 1/2% interest in Sunrise. Pursuant to the agreement, the
Partnership advanced a working capital loan of $200,000 ("the note") under
three different advances. One advance of $100,000 was made on April 15,
1997 and two advances of $50,000 each were made on May 15, 1997 and June
15, 1997. The note bears interest at a rate of 7% per annum and, upon the
closing of a private equity offering, will be converted to equity on the
same basis as the private equity financing.
In the second quarter, the investment in Sunrise was adjusted to
reflect the Partnership's 55.5% share of net loss for the period ended June
30, 1997.
No additional investments were made during the quarter ended June 30,
1997, except as outlined above.
(2) MATERIAL CHANGES IN OPERATIONS
Discuss material changes with respect to the most recent year-to-date
period and corresponding period for prior year, if most recent quarter
included also covers changes for quarterly period.
During the past quarter, the Partnership recorded a net investment
loss of $195,086. Interest income has increased as a result of accruing
interest in new advances to portfolio companies, but an overall investment
loss was recorded due to increased expenses. General and administrative
expenses rose to $204,010 for the quarter ended June 30, 1997, primarily
due to increased legal and other expenses incurred in monitoring the
portfolio. In addition, the net decrease in net assets resulting from
operations is due mostly to the loss incurred by the Partnership as a
result of its investment in Sunrise Media, LLC.
Income received is primarily from interest income on a portfolio of
Convertible Debenture investments and upon the sale of common stock. In
prior quarters, as investments were committed or closed, income from
closing fees and commitment fees were also recorded. This source of income
is not available on an ongoing basis, except to the extent funds are
available for new investments.
Portfolio investments still held as debentures require interest
payments generally on either a monthly or quarterly basis. UNICO, Inc. has
certain Term Notes outstanding with the Partnership in which interest is
payable annually. As of June 30, 1997, all companies are deliquent on
interest payments. Biopharmaceutics, Inc. is in arrears in interest
<PAGE>
<PAGE> 13
(2) MATERIAL CHANGES IN OPERATIONS (continued)
payments to the Partnership in the aggregate amount of $360,089.11. Global
Environmental is in arrears in interest payments to the Partnership in the
aggregate amount of $34,107.65. International Movie Group, Inc. is
inarrears in interest payments to the Partnership in the aggregate amount
of $450,246.55. UNICO, Inc. is in arrears in interest payments to the
Partnership in the aggregate amount of $173,479.32.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
--------------------------
The Partnership has been included by consolidation with Renaissance
Capital Group, Inc. in the pending Pembroke lawsuits previously reported in
the Partnership's December 31, 1996 Form 10-K, Item 3.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Partnership has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RENAISSANCE CAPITAL PARTNERS, LTD.
August 13, 1997 /s/ Russell Cleveland
-------------------------------------
Renaissance Capital Group, Inc.,
Managing General Partner
Russell Cleveland, President
August 13, 1997 /s/ Barbe Butschek
--------------------------------------
Renaissance Capital Group, Inc.,
Managing General Partner
Barbe Butschek, Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 9,095,105
<INVESTMENTS-AT-VALUE> 9,875,131
<RECEIVABLES> 124,498
<ASSETS-OTHER> 1,065
<OTHER-ITEMS-ASSETS> 1,391,236
<TOTAL-ASSETS> 11,391,930
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 121,867
<TOTAL-LIABILITIES> 121,867
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,040,868
<SHARES-COMMON-STOCK> 129
<SHARES-COMMON-PRIOR> 129
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 574,704
<ACCUMULATED-NET-GAINS> 833,043
<OVERDISTRIBUTION-GAINS> 1,809,168
<ACCUM-APPREC-OR-DEPREC> 780,024
<NET-ASSETS> 11,270,063
<DIVIDEND-INCOME> 2,314
<INTEREST-INCOME> 89,481
<OTHER-INCOME> 16,467
<EXPENSES-NET> 412,696
<NET-INVESTMENT-INCOME> (304,434)
<REALIZED-GAINS-CURRENT> 2,625,016
<APPREC-INCREASE-CURRENT> (3,241,101)
<NET-CHANGE-FROM-OPS> (920,519)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (920,519)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 270,271
<OVERDIST-NET-GAINS-PRIOR> 2,120,520
<GROSS-ADVISORY-FEES> 112,738
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 412,696
<AVERAGE-NET-ASSETS> 11,730,323
<PER-SHARE-NAV-BEGIN> 94,226
<PER-SHARE-NII> (2,339)
<PER-SHARE-GAIN-APPREC> (4,733)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 87,154
<EXPENSE-RATIO> .035
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
